In the recent SBI Cards Q2 FY24 conference call, several key insights emerged, shedding light on the company’s performance and challenges within the credit card and personal loan space.
Market Share and Industry Dynamics:
SBI Cards currently holds a substantial market share of 19%, making it a notable player in the industry. However, industry data from credit bureaus reveals a concerning trend of deteriorating delinquencies in both credit cards and personal loans.
Spending Trends Across Segments:
Despite challenges, the company reported strong Point of Sale (PoS) and online spends across various segments, including Jewellery, Travel, Restaurants, Health, and Utilities. Notably, PoS spends in offline categories such as Jewellery, Apparel, Consumer Durables, furnishing, and hardware have shown a significant uptick, indicating resilient consumer activity.
Credit Costs and Unsecured Loans:
The credit cost stands at 6.7%, and industry data highlights stress in unsecured loans. While there is no specific cohort exhibiting stress, the company is placing a heightened focus on collections. Some customers are reportedly facing financial stress, leading to difficulties in repayment.
Receivables Growth and Future Expectations:
The growth in receivables has witnessed a year-on-year decline in Q2. This is attributed to the absence of the festive period in the Q2 of this fiscal year compared to the same period in the last fiscal year. However, on a quarter-on-quarter basis, the credit cost has slightly decreased (6.7% vs. 6.8% QOQ). Despite these challenges, the company remains optimistic, stating that it does not perceive the current scenario as a runaway situation. SBI Cards anticipates improved book behavior with lower delinquencies in the future.
Conclusion:
In navigating the complexities of the credit market, SBI Cards appears resilient, adapting strategies to address challenges while maintaining a focus on collections. The company’s optimism for improved future performance suggests a proactive approach to managing credit risks in the evolving financial landscape.
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